Favio Ltd manufactures high-impact plastic bike helmets. The A-1 helmet is produced in two processes: plastic extruding and assembly. The company has adopted an activity-based costing system. The following activities have been defined:
• Design A-1 helmet.
• Store materials.
• Move raw materials to production.
• Set up extruding machine.
• Operate extruding machine.
• Move product to assembly area
• Assemble helmet.
• Label helmet
• Inspect and test helmet.
• Package helmet.
• Move finished helmet to shipping
• Advertise A-1 helmet.
Required:
1. Identify the non-value-added activities at Favio Ltd.
2. Select three non-value added activities and identify two possible root cause cost drivers for each one.
3. Use a process (supplier or customer) perspective to suggest a possible performance measure for the activity 'Inspect and test helmet.